The cryptocurrency user base has seen a steep incline over the past few years. A recent Statista study shows that the number of users trading cryptos has increased 190% between 2018 and 2020, i.e., from 18 million users to nearly 101 million users in 2020. However, it has grown further, reaching 295 million active crypto traders by December 2021.
If you’re looking to make a foray into cryptocurrency, the above stats may be tempting to build your exchange. It’s certainly possible: several platforms for creating your crypto exchange, many of which are free or low-cost. The challenge is that building an exchange from scratch requires careful planning and execution.
Various aspects of the project, such as security, design, and digital marketing, need to be handled correctly for your new exchange to succeed. This article will walk you through tips on covering those areas before you dive into this project yourself.
Secure Your Server
Securing your server is the first step in building a successful crypto exchange. You can start by utilizing a high-security server that has been updated with security updates and firewalls. Ensure you have all the right permissions set so that only necessary users, such as yourself and other admins, can access important files like wallet data.
As per Positive Technologies, their team of pentesters breached 93% of online projects and got access within their network perimeters. They said that 60% of these projects had vulnerabilities in their software, while 43% had issues with their web application coding. Thus, checking for vulnerabilities in your network firewalls and coding thoroughly is important.
Ensure you set up a backup system that will allow you to recover your server in the case of an attack. You should also consider investing in a multi-factor authentication system to protect against hackers trying to access your account.
Know Your Options
You have many options when it comes to building your exchange. For example, you can build a full-featured trading platform from the ground up using a variety of crypto-specific technologies, or you can use an existing service that provides much of the functionality needed for an exchange, like Cloudflare. Or you could use one of these other services:
- Coinbase: The popular US-based cryptocurrency exchange offers a simple toolkit for building an exchange in under two minutes without any coding experience. It is great if you want something quick and easy, but it does come with some tradeoffs, the most notable being security.
- Blockstack: This blockchain company is attempting to build decentralized apps on top of its infrastructure. Thus, they’ve got everything you need to set up your token sale website or cryptocurrency marketplace. You’ll get access to software written in NodeJS/JavaScript and designed around RESTful APIs with JSON web tokens (JWT) authentication.
Design
Design is important. Design is what makes a product or service usable. You can have the greatest technology in the world, but if it’s not simple enough for your users to understand and use, they won’t want to use it, which means fewer customers.
Research from Zippia claims that 94% of users would pull out of your website if they dislike its design. At the same time, 88% of potential customers would not visit your website again if they had a bad user experience (UX). The stats reflect the importance of your website design and how it impacts your potential customers.
That doesn’t mean you should ignore your technical side. But what makes up design? The answer is simplicity and consistency across all platforms, including web, mobile app, etc. This means:
- Using fonts that are easy on the eye and don’t distract from content;
- Images that add clarity rather than clutter;
- Clear navigation so users don’t get lost;
- Readable text with high contrast between the background color and font color;
- Good contrast between website sections so users can easily find their way around;
- Minimalism where possible; and
- Most importantly: responsiveness.
Have a Team to Promote Your Exchange Via Digital Marketing
Digital marketing is an important part of promoting your exchange. There are several ways you can promote your exchange:
- Use social media and email marketing to reach out to potential users in the crypto space and beyond.
- Create buzz around the exchange by creating great content that speaks directly to people’s needs and interests, like podcasts, videos, or articles.
- Work with influencers with high followings in the industry or community where they operate.
You need a team that has experience with digital marketing, so they know how best to promote your exchange through different channels. You can do this by hiring a digital marketing recruitment firm to help you build your online marketing team. It can be an excellent way to streamline finding qualified candidates and save time.
The best recruiters deeply understand how to apply digital marketing techniques to promote a crypto exchange. They know how to assess candidates for their suitability for a role. They also have access to a network of talented professionals looking for exciting new opportunities in this growing field.
Exchange Solutions
When choosing an exchange solution, you should consider the following:
- Security and Scalability. Is your chosen solution secure? Is it scalable enough to handle a large volume of transactions per second (TPS)?
- Ease of Use and Maintainability. Does the solution have a simple interface that makes it easy for new and experienced users to use? Can this solution easily be maintained by your company’s IT team? Is there any additional training required for employees who will be using this software regularly?
- Flexibility and Customization. How much customization is possible with the software’s features? Are there other features you can add in the future without needing an entirely new system to be developed from scratch again? It is important as it could cost hundreds or thousands more than adding additional functionality when initially purchased.
- Cost-Effective Pricing Structure. How does the pricing structure work? Are there any add-ons or extra fees for additional features? How much will it cost to run this solution on an ongoing basis? Will you need additional resources, such as servers and support staff, to manage the software after its initial installation?
Integrate API keys
API keys are the first line of defense against hackers. They’re a set of credentials that allow your application to connect to a third-party service, such as an API.
You can use API keys in conjunction with a secret key to authenticate requests to the service. The API key is typically used as part of an HTTP header. It helps prevent spoofing attacks where someone impersonates your application and fakes its identity by making requests on behalf of your account.
Use a Renowned KYC Module
A KYC module is a must for any crypto exchange. It would be best if you used this module for customer verification, regulatory compliance, and anti-money laundering purposes.
When it comes to customer verification, you should use the KYC process to verify customers’ identities through their government-issued IDs, such as passports and driver’s licenses. The second step of the process involves verifying their addresses by looking at their utility bills or bank statements.
Certain other documents can be used for validation depending on your business needs and jurisdiction requirements. However, you must remember to complete these two steps before enabling users’ trading accounts. Then you can allow them to start trading without waiting too long just because they forgot something important when filling out their details on your website.
Test the Exchange Thoroughly
Testing your exchange is the most important stage of development. You can do it by individually testing each API, front end, back end, and server. Testing should also be done on all supported databases. Here’s a quick guide on how to test your crypto exchange.
- Test the APIs: You can test them using Postman or REST Client; both are free. It will help you see if there are any bugs in design and coding before releasing it to users.
- Test the Front End: Once again, you can use Postman or REST Client for this purpose but make sure that every functionality is working fine before making it live on your website. There might be some minor bugs that can be easily fixed by just playing around with different parameters while testing them properly.
- Test the Back End: You need to write unit tests at this point and ensure that everything works smoothly so that no error occurs when people start using it.
- Test the Server: You should run some load tests on your servers before making it live so there are no server crashes or slowdowns.
Follow Industry Level Practices to Have a Successful Crypto Exchange
To build your crypto exchange, it’s important to follow best practices. Best practices aren’t just for security but also for user experience. They are critical for your reputation and brand as well as for the success of your business or project.
A successful crypto exchange will also have a secure infrastructure that complies with all relevant laws and regulations in its jurisdiction.
Building a cryptocurrency exchange is not for everyone. It takes time, patience, and a lot of money. But if you are determined to start one, these tips might help you along the way.